SHAH ALAM, June 9 — The political turmoil in West Asia that has made global fuel prices soar is starting to impact various industrial sectors in Selangor, to the point that some business owners are slashing production for the sake of operational continuity.
Several trade associations have thus urged the state government to be proactive by providing targeted subsidies and licence fee rebates, and control market competition to prevent rising prices from burdening consumers.
Previously, state executive councillor for investment, trade and mobility Ng Sze Han said the Selangor administration will hold roundtables with commerce chamber representatives soon to come up with strategies to face the energy crisis.
Plastic packaging costs jump 150 pct
Malaysia Food Manufacturers Association (PPMM) Ding Hong Sing said the food and beverage industry is among those worst affected as 90 per cent of its production and logistics are diesel-dependent.
“(The prices of) key raw materials like petroleum-based food packaging plastic have jumped up to 150 per cent, and there is a supply problem. This global petroleum price increase clearly has a domino effect on manufacturers.
“We had a meeting with Sze Han in April to present an industry memorandum. We asked that the state government consider quit rent exemptions and decreased licence renewal fees, which has reportedly gone up to RM1,200 for certain factories,” he told Media Selangor.
Ding also said some manufacturers act as wholesalers and cannot simply raise prices like smaller traders as they are bound to contracts with supermarkets.
“For my own company, diesel spending alone has gone up to between RM76,000 and RM100,000 compared with a few months ago. Because supermarkets don’t allow wholesale prices to go up, we have to reduce production to reduce losses,” he said, adding that he expects cost hikes to prolong beyond June if the West Asia conflict persists.
Mechanical sector pressured by foreign competition
Meanwhile, Selangor and Federal Territory Machinery Merchants Association (SAFMA) president Lam Ming Swee said machine component import costs for the mechanical sector have increased by just under 20 per cent.
However, he said most association members have chosen to absorb the price hike even with shrinking profit margins, although this may force them to transfer some of the costs to consumers if market pressures persist.
Besides fuel costs, Lam also brought up unhealthy competition in the industry due to foreign operators monopolising local markets.
“Some of these foreign operators bring in cheap components from abroad, affecting local industry players’ competitiveness.
“We hope the Selangor government can enforce tighter restrictions or controls on these foreign traders’ operations, and channel financial aid or special incentives (to locals) to subsidise diesel,” Lam said.
